After several years depending on the non-oil sector as a result of the huge slump in oil prices, Bahrain has surprised the whole region with a new oil discovery that is going to take the non-oil sector by storm.
A few weeks back, Bahrain’s Higher Committee for Natural Resources and Economic Security announced the discovery of oil and gas in the offshore Khaleej Al Bahrain Basin. According to the committee, this is considered the largest discovery in the history of the country and the entire region since the 1930s.
According to Abdulrahman Bu Ali, head of parliament’s financial and economic committee, the anticipated production levels from the new finds are expected to reach 200,000 barrels per day.
These new finds comprise of more than 80 billion barrels of oil in addition to a separate natural gas discovery of 13.7 trillion cubic feet (tcf).
However and as mentioned by authorities, the new finds are defined as probable reserves that have a 50 percent chance of being commercially produced.
Nevertheless and given the geological nature of the site in the area which is recognized as “sweet spot” in the southwest Bahrain, the extracted quantities will be characterized by high-quality oil production.
The oil discovered in Bahrain is held in source rocks, which indicated that the kingdom will be facing real obstacles extracting this new finds,
1- While facts prove that the discovery is indeed huge, but the Kingdom of Bahrain still lacks the required information on how much of this discovery is actually commercial recoverable.
Initial analysis state that the new finds are a tight reservoir, all of which means that recovering large amounts of oil will be difficult and almost impossible; hence, only a fraction of the 80-plus billion barrels will be recovered.
2- Extracting this tight oil requires advanced and costly technology that uses hydraulic fracturing, or fracking, using deep horizontal wells. This will force Bahrain’s authorities to hire international oil companies to do the job.
This discovery will force Bahrain to alter the fiscal terms of the contracts signed with these companies than they were before and that is to attract renowned and experienced companies.
“Agreement has been reached with Halliburton to commence drilling on two further appraisal wells in 2018, to further evaluate reservoir potential, optimize completions, and initiate long-term production,” Sheikh Mohammed told a news conference in Manama.
Impacts of the new finds on real estate sector
A spokesman at DeGolyer and MacNaughton – a petroleum consulting company based in Dallas, Texas – stated that the evaluated reservoir and tested data proves volumetric and recovery potential, all of which indicates Prospective and Contingent Resources.
If this proves to be correct, it will have a humongous impact on the real estate sector in Bahrain.
Bahrain real estate sector has proved its resilience despite the oil slump and over the last couple of years, it became a totally independent filed that is capable of developing all on its own.
The new oil and gas finds won’t hinder the field’s progress; on the contrary, they will give it a huge boost and support to continue on growing and remaining a vibrant field that supports Bahrain’s current economic trajectory.
Here is what the real estate sector in Bahrain will benefit from this new oil discovery,
1- The start of oil production will drive more real estate activities in respect of transactions and development of new real estate projects in all sectors, whether residential, commercial and retail.
2- Experts predict that the operations of this new field will lead to a surge in real estate prices.
3- More and more investors will be encouraged to invest in real estate in Bahrain.
4- Stalled real estate projects will get moving and their construction process will commence once more.